Tigers reportedly fell just $2 mil shy of luxury tax
The Tigers have paid out luxury tax for payroll only once since Major League Baseball put the system in place in 2003. That was in 2008. If an Associated Press report is accurate, Detroit came as close this year to crossing the threshold as it has since paying out.
According to final calculations reportedly obtained by AP, the Tigers finished with the third-highest payroll in the game at just over $187 million. That’s just $2 million shy of the $189 million mark that triggers the luxury tax calculation.
The two teams with higher payrolls — the Dodgers and Yankees — are reportedly due to pay out $45 million combined in luxury tax. Both pay higher rates as repeat big spenders — 30 percent for the Dodgers, 50 percent for the Yanks. If Detroit had gone over, it would have had to pay tax at just a 17.5% rate for first-timers on the excess amount.
The luxury tax threshold rose from $175 million in 2013 to $189 million this year. It will stay at $189 next season, so any significant increase will put the Tigers at risk again. And while the Tigers shed payroll with Torii Hunter in Minnesota, Austin Jackson in Seattle and Max Scherzer potentially headed elsewhere, the average annual value on Victor Martinez’s contract goes up from $12.5 million to $17 million. Meanwhile, David Price is up for arbitration one more time after earning $14 million this year. Also, Joakim Soria will be making $7 million with his option year exercised, and Alex Avila gets a raise to $5.4 million with his option picked up.
The total payroll numbers here are significantly higher than numbers previously seen. However, for luxury tax purposes, MLB uses average annual salaries on long-term contracts, not a specific year’s salary. It also includes the 40-man roster, not just the active 25-man list from Opening Day, and includes benefits.
That thin margin perhaps offers some view into why Alfredo Simon made sense for the Tigers in replacing Porcello. Payroll went up a few million in the Simon and Cespedes trades, but it would have surely been more had the Tigers acquired a higher-salaried, longer-term starter like Mat Latos.
Given the numbers, it would be nearly impossible for the Tigers to re-sign Scherzer without paying out luxury tax, meaning a deal would come at a higher cost than the salary in the contract. They could take comfort in the likelihood that they’d only be paying it for a year if Price leaves as a free agent next winter, but it would still be a complication.